Lawsuit claims KU didn’t pay over $3 million owed to Chicago-based company whose work led to Pepsi contract
photo by: Associated Press
A lawsuit filed last week in Douglas County District Court alleges that the University of Kansas owes over $3 million to a sports marketing firm in Chicago for work related to a 2015 contract.
The consulting work done by Navigate Marketing Inc. is what led KU not only to a more lucrative beverage contract with Coca-Cola, but an even more lucrative contract with Pepsi when the university switched to the soda giant in 2018, according to the lawsuit.
It was not immediately clear if KU solicited the firm in 2015 solely to determine the benefits of switching beverage providers, as the contract between the two parties was not attached in the lawsuit. The lawsuit states only that Navigate was tasked with “analyz(ing) corporate sponsorship opportunities for KU and identify(ing) how KU could leverage certain assets, rights, and purchasing power across its campus to produce annual incremental revenue.”
The university has not yet responded to the lawsuit in the court system. KU spokesperson Erinn Barcomb-Peterson told the Journal-World in an email that the university was “aware of the filing but (we) do not comment on pending litigation.”
According to the complaint, KU agreed to pay Navigate Marketing monthly invoices totaling $10,000 for the duration of the contract, which it did from when the contract was signed in January 2015 through August of that year. The September invoice, however, was not paid, nor were six subsequent monthly invoices, the complaint says, even though KU renewed the contract in December of 2015.
No KU officials were named in the lawsuit, which alleges only a breach of contract by the university as a whole.
The university allegedly owes the firm $70,000 in unpaid invoices for completed work, but most of the $3 million Navigate is seeking comes from commission on the two beverage deals.
As part of the contract, Navigate says it was obligated to receive from KU a 10% commission from the first $1 million in revenue from any contracts negotiated through the firm’s work, in addition to a 15% commission from revenue greater than $1 million, the lawsuit says. KU has paid out no such commission, the lawsuit says.
Navigate alleges that its consulting work allowed KU to add significant revenue to its then-standing contract with Coca-Cola. That contract was based on the exclusive rights for Coke to sell its products on KU’s campus as equaling $800,000, when Navigate found that figure to actually equal $1.1 million when compared with other universities.
KU then used those findings in its negotiations with Pepsi (that contract was finalized in August 2018), which added to the value of the new contract the university received, Navigate says. The revenue KU brings in from the Pepsi contract, according to the lawsuit, is over $20.5 million, and since the consulting work led to a more profitable agreement, Navigate says it’s entitled to the commission agreed on in its contract with KU.
The 10% commission on the first $1 million in revenue, combined with the 15% commission on the remaining $19.5 million in revenue, means that KU owes Navigate $3,029,500, plus the $70,000 in invoices. In the lawsuit, Navigate asks that KU be ordered to pay all contractually agreed on fees, in addition to any further amount determined by the court.